Brazil Economic Activity February 2016

Brazil: Economic activity grows at multi-year high in February

April 17, 2017

In February, economic activity in Brazil grew 1.3% from the previous month in seasonally-adjusted terms, according to the Central Bank’s monthly indicator for economic activity (IBC-Br, Indice de Atividade Economica do Banco Central). The result marked the fastest growth in over 7 years and was an improvement from January’s revised 0.6% increase (previously reported: -0.3% month-on-month). In addition, the reading beat market analysts’ expectations of a 0.6% expansion and provides evidence that the country is emerging from the worst recession in decades.

On an annual basis, economic activity fell 0.7% in February, which contrasted January’s 0.5% increase. Meanwhile, the trend improved and the annual average variation in economic activity came in at minus 3.9%, which was up from January’s minus 3.9%.

The analysts surveyed for this month’s LatinFocus Consensus Forecast expect the economy to grow 0.5% in 2017, which is down 0.1 percentage points from last month’s estimate. For 2018, the panel of analysts sees GDP rising 2.4%.

Retail sales (excluding cars and construction) fell 1.5% from the previous month in seasonally-adjusted terms in December, which contrasted November’s revised 1.0% increase (previously reported: +0.7% month-on-month).
Declines were seen nearly across the board, with only two of the eight components of the index seen growth in sales.

At its 7 February meeting, the Central Bank of Brazil’s Monetary Policy Committee (Comité de Politica Monetaria, COPOM) decided to cut the benchmark SELIC interest rate by 25 basis points, a smaller cut than the 50 basis-point reduction it made at the previous meeting.